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Act 885 — help for homeowners in default

By: 24 April 2011 One Comment

So many bills came through the most recent Arkansas legislative session that a few important ones were somewhat overlooked.

One of those is Act 885, a bill that was introduced by State Rep. Tiffany Rogers (D-Stuttgart) and was signed into law by Gov. Mike Beebe at the end of March. What is that law? Simply put, it requires mortgage companies to provide a copy of the note and mortgage to people going through foreclosure.

That might sound like a minor bill, but it assures an essential right. Last year, of course, a lot of questions were raised over how foreclosures were being handled throughout the nation. One of the concerns raised by a group of attorneys general – including Arkansas’ Dustin McDaniel – had to do with people facing foreclosure proceedings without the benefit of copies of the original notes and mortgages on which the cases hinged.

While a good number of banks operating in Arkansas service their own loans, there are others that transfer those loans to servicers. There were more than a few cases nationally in which people were served with foreclosure notices by a servicer and were never provided a copy of the notes and mortgages on which they were allegedly in default.

That’s a major concern, according to April Carrie Charney, senior staff attorney at Jacksonville, Fla., Area Legal Aid. She was at a Legal Aid of Arkansas seminar last April claiming some people were getting foreclosed on by institutions that hadn’t yet established they actually held the mortgages in question – a pretty important fact to establish when you’ve started a proceeding to effectively take away someone’s house.

Charney said another problem is that loan servicers are required to step in when a mortgage goes into default and attempt to work out a plan with the borrower in hopes of making the loan current. She alleged that step was skipped by some lenders.

Act 885 addresses that issue, too. The new law requires mortgage holders to certify that it has reviewed requests for assistance from the borrower and that it has been determined that no programs – federal or otherwise – are applicable.

Furthermore, the law requires the mortgage holder to provide a very specific notice of default to a borrower before a property is sold.

Bear in mind that most mortgage holders operating in Arkansas followed the right steps before and during a foreclosure procedure. However, McDaniel has raised concerns in the past about foreclosure practices, primarily by large servicers that weren’t headquartered in Arkansas. Again, the servicers at issue were some of the ones that took over loans that originated at Arkansas institutions and transferred elsewhere.

Act 885, then, is one of those consumer protection bills that may do some good. While most mortgage holders won’t have to alter their procedures much – if at all – under the the new law, the act is out there to make sure that the rights of consumers are protected in foreclosure proceedings.

Seeing how major institutions such as Bank of America and Wells Fargo voluntarily reviewed their foreclosure practices last year, it appears the state of Arkansas and the major mortgage servicers are on the same page as far as Act 885 is concerned.

Home Sweet Home is written by Ethan C. Nobles and is sent weekly to publications throughout the Natural State on behalf of the Mortgage Bankers Association of Arkansas.

About: Ethan C. Nobles:
Benton resident. Rogue journalist. Recovering attorney. Email =

One Comment »

  • Marianne Davis said:

    Very informative article…thanks so much for this much needed info! I sent an email….

    Thanks again!

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